Impact of risk management strategies on the credit risk faced by commercial banks of Balochistan

Rehman, Zia Ur; Muhammad, Noor; Sarwar, Bilal; Raz, Muhammad Asif

doi:10.1186/s40854-019-0159-8

Cited by 35 publications

(22 citation statements)

References 26 publications

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“…In condition 2, the analysis records negative and significant beta coefficients across CAR and ORW, which is not verified for credit risk management. As a matter of fact, this result partially validates H2, and confirms the findings in the previous empirical research stating that innovation influences risk management (Philippas & Siriopoulos, 2009;Mabrouk et al, 2016;Zia et al, 2019).…”

Section: Resultssupporting

confidence: 89%

“…González et al (2016) add that securitization increases the overall default risk of European financial institutions. The results for study of Zia, Muhammad, Sarwar and Asif Raz (2019) identified four areas of impact on credit risk management: corporate governance exerts the greatest impact, followed by diversification or innovation, which plays a significant role, hedging and, finally, the bank's Capital Adequacy Ratio. This study highlights these four risk management strategies, which are critical for commercial banks to resolve their credit risk.…”

Section: Financial Innovation and Risk Managementmentioning

confidence: 99%

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Financial Innovation, Risk Management, and Bank Performance

Zouari

Abdelmalek

2020

CJFA

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Several researches conducted from the angle of corporate governance reveals that the majority of the work that examines the direct association between financial innovation and bank performance has displayed mixed results and has ignored the indirect relationship between these two variables through the risk management of incurred by the bank. In this context, the purpose of this study is to investigate whether or not there is a mediating effect of risk management on the relationship between financial innovation and bank performance. Data collected from annual activity reports of banks listed on the Tunis Stock Exchange is analyzed, and used to validate the theoretical and empirical contributions of our article. The empirical study uses the Panel data extracted from 10 banks, over the period ranging from 2009 to 2017, and the Baron and Kenny (1986) mediation approach has been estimated, using specifications of random effects. Our empirical analysis substantiates that financial innovation has a positive direct effect on stock market performance, and a non-significative impact on financial profitability. Additionally, our results show that improving the stock market performance of banks by financial innovation depends on the mediator role of the operational risk management. To remain improving performance, Tunisian banks must pay more attention on special training of bank managers whose function relate to the choice of financial innovations and manage the associated risks.

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Section: Resultssupporting

confidence: 89%

Section: Financial Innovation and Risk Managementmentioning

confidence: 99%

Financial Innovation, Risk Management, and Bank Performance

Zouari

Abdelmalek

2020

CJFA

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“…According to Rehman (2019), corporate governance has the greatest impact on credit risk management (CRM), followed by diversification, hedging, and, finally, the bank's Capital Adequacy Ratio. The relevance of these four risk management approaches for commercial banks in addressing credit risk is emphasized in this study.…”

Section: Journal Of Entrepreneurship Management and Innovation Volume...mentioning

confidence: 99%

Credit Risk Management Practices and Banks’ Performance in Pakistan

Qazi

Ahmad

Khan

et al. 2022

JEMI

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The main objective of this study is to investigate whether the credit risk management of Pakistan's commercial banks listed on the Pakistan Stock Exchange is linked to financial performance. For this purpose, the researchers have attempted to analyze the data trends of five major banks of Pakistan as a proxy representation of the entire banking sector of Pakistan. Five (5) years of panel data collected from the State Bank of Pakistan Annual publication and annual reports of respective banks was used to conduct the research. The study found that underperforming Credit Risk Management (CRM) loans and Capital Adjustment Ratios (CDRs) have an impact on the financial achievement of Pakistani commercial banks as measured by return on equity (ROE) and return on assets. For panel data analysis, inferential statistics (regression models) were used in this study. After analyzing the data, the researcher found that CRM has a significant impact on the financial performance of Commercial Banks of Pakistan. Furthermore, the researcher encourages the Pakistani banks to grow their profitability in terms of better CRM. Pakistan's banking sector must develop suitable CRM strategies and policies through a sound credit appraisal before lending to consumers and banks; an appropriate CRM mechanism must be developed, and the credit awards system must be thoroughly reviewed, properly informed and used to repay loans. Pakistani Banks would develop and implement strategies to improve their performance & competitiveness as well as limit their lending risk exposure.

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“…Arora (2014) presented a major difference between government and private banks in India in measuring credit risk. Rehman et al (2019) examined the risk management strategies adopted by commercial banks of Pakistan and found that corporate governance, hedging, diversification, and the banks' capital adequacy ratio, are factors significantly explaining credit risk management. Sirus et al (2019), study suggest that the identification of credit risk significantly affects the credit risk performance.…”

Section: Literature Reviewmentioning

confidence: 99%

Credit Risk Management Practices of Indian Banking Industry: An Empirical Study

Brahmaiah

2022

IJEFI

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The primary objective of this paper is to examine the risk management techniques and practices of credit risk management followed by Indian commercial banks for the period from 2021-17 to 2020-21. The other objective is to compare risk management practices followed by the public sector banks (PSBs) and private sector of banks (PVBs). The study uses a sample of twelve banks consisting of six largest public sector banks (PSBs) and six largest private sector banks (PVBs) for the study. The sample accounts for 78 per cent of the banking business of the country. The study finds that the scheduled commercial banks (SCBs) are facing credit risk, market risk and operational risk. The study finds that the credit risk management process and practices include risk identification, risk assessment, risk analysis, risk evaluation, risk monitoring and risk control. The study finds that private sector banks (PVBs) have better credit risk management practices as compared to that of public sector banks (PSBs). The PSBs have more NPAs than PVBs whereas PVBs have better asset quality and better profitability ratios than PSBs during the study period.

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Impact of risk management strategies on the credit risk faced by commercial banks of Balochistan

Cited by 35 publications

References 26 publications

Financial Innovation, Risk Management, and Bank Performance

Financial Innovation, Risk Management, and Bank Performance

Credit Risk Management Practices and Banks’ Performance in Pakistan

Credit Risk Management Practices of Indian Banking Industry: An Empirical Study

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